If Mediacom's for Sale, Who Should Buy?

Mediacom CEO Rocco Commisso is one of the great characters in the cable industry narrative of the last few decades, and now, according to a profile piece in Forbes, he may be ready to cash it all in and retire from the business.

Given the trend toward market consolidation, it's no surprise that Commisso may be looking for a buyer right about now. However, his choice to hint at that fact in a Forbes story is rather a blatant approach to advertising the news that Mediacom Communications Corp. is up for sale. As Fierce Cable points out, the tactic isn't quite as brash as Cablevision's Jimmy Dolan asking for buyers on the stage at the Cable Show in 2015, but it's close.

The question is, if Commisso wants to sell, then who is likely to buy Mediacom?

The company records itself as the fifth-largest cable operator in the US, with more than 1.3 million customers and revenues in 2017 of nearly $1.9 billion. Like virtually every other network operator, Mediacom has been shedding video subscribers and was down to 821,000 at the end of last year. However, the company continues to gain broadband customers, reaching more than 1.2 million data subs last year, and its commercial services business is also growing.

Mediacom isn't quite the prize that Cox Communications Inc. would be with its more than 4 million broadband subscribers, but it is one of the few significant cable companies left that could conceivably be folded into a larger operation.

Because Mediacom has a traditional cable network footprint -- i.e. one relying heavily on DOCSIS-based services -- it's hard to imagine the company would be appealing to anyone outside the cable sphere. Comcast Corp. (Nasdaq: CMCSA, CMCSK) could be a buyer candidate, but with its eye on Sky in the UK, that seems unlikely right now. (See Comcast Bids $31B to Steal Sky From Fox, Disney.)

Plus, since Comcast is already the largest cable provider in the US, it would have to convince regulators that adding Mediacom wouldn't harm the market. That could be a big fight, and for such a small acquisition, it hardly seems worthwhile.

Charter Communications Inc. is theoretically another contender, but adding more cable assets doesn't appear to be that company's priority right now. Charter is heavily focused on building a wireless strategy, and may even be an acquisition target itself for Sprint's parent company, Softbank. (See Rumor Mill: SoftBank Still Eyeing Charter.)

As the largest shareholder of Charter Communications, Liberty Broadband might review a Mediacom proposition. Or the fellow John Malone property GCI Liberty (a combination of the old GCI business and select assets from the Liberty Interactive Liberty Ventures Group) might consider a buyout. Where acquisitions are concerned, it's never a good idea to count Malone out. (See Malone Cable Empire Expands to Alaska.)

But the most obvious choice as a Mediacom suitor is Altice USA . Altice USA is in the process of spinning out from the global Altice entity, and has taken on a good amount of debt. As a result, executives have downplayed M&A talk in recent months. But its leadership team has also been vocal about wanting to expand in the states sooner or later and, as noted, there are limited other opportunities to do so. (See Altice USA Embraces Home-Alone Strategy.)

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What would Altice USA gain from Mediacom? On the pro side, Mediacom faces limited competition in the markets where it operates, and the operator has already made the transition to DOCSIS 3.1, giving it the ability to offer gigabit services to virtually all of its customers.

On the potentially negative side, however, Mediacom specializes in rural areas, while Altice holds ultra-urban New York City as the crown jewel in its market footprint. That shouldn't be a deal-breaker given where else in the US Altice operates, but it might give executives pause.

Could Commisso overcome possible hesitation? It would certainly fit with his personality profile. The CEO has brought Mediacom this far. Such a final hurdle seems a reasonable challenge to cap off Commisso's career.